U.S. Federal Trade Commission Sues CVS Health, Cigna, and UnitedHealth Prescription Drug Benefit Managers for Inflating Insulin Prices

On Friday, the Federal Trade Commission (FTC) filed a formal complaint against three major pharmacy benefit managers (PBMs):CVS Health Inc. (NYSE:CVS) Caremark, Cigna Corp. (NYSE:CI) Express Scripts and UnitedHealth Group Inc. (NYSE: UNH) Optum — for allegedly engaging in unfair and anticompetitive practices that inflated the list price of insulin drugs.

The complaint accuses PBMs of creating a system that benefits them financially by prioritizing drug discounts, forcing patients to pay higher costs for life-saving insulin. These PBMs, known as the Big Three, fill about 80% of prescriptions in the United States.

Also read: Federal Trade Commission targets ‘undesirable patent lists’ for diabetes, weight loss and asthma drugs from companies including Novo Nordisk and AstraZeneca.

The FTC says PBMs abused their market power to inflate insulin prices by promoting a rebate system to drugmakers.

This system led to the exclusion of low-cost insulin from drug lists, further increasing the cost for vulnerable patients.

This results in higher out-of-pocket costs for those who need essential diabetes medications.

For example, the list price of Eli Lilly and Company (NYSE:LLY) Humalog has risen dramatically from $21 in 1999 to over $274 in 2017.

Despite the availability of cheaper alternatives, PBMs favored more expensive drugs because of the lucrative discounts they offered.

The FTC is also examining the role of drug manufacturers, including Eli Lilly, Novo Nordisk A/S (NYSE: NVO) and Sanofi SA (NASDAQ:SNY), driving up insulin prices, signaling possible further action against the companies.

The rebate-based system excluded low-cost insulins and allowed the Big Three PBMs to retain significant revenue in the form of rebates and fees, a strategy that harmed patients while financially benefiting the PBMs.

Vulnerable patients, such as those with high deductibles or co-insurance, have borne the brunt of these inflated costs, paying more for their insulin than the overall net cost to insurers.

Price action: At last check Friday, CVS shares were down 1.61% at $57.49, UNH shares were down 0.29% at $575.39 and CI shares were up 0.07% at $357.52.

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Photo by towfiqu barbhuiya via Unsplash

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This article U.S. Federal Trade Commission Sues CVS Health, Cigna, UnitedHealth Pharmacy Benefit Managers for Inflating Insulin Prices originally appeared on Benzinga.com